It is our opinion that most of the ills of our tobacco programs today have been brought about by several factors, the most important of which are (1) decrease in disappearance, due mainly to a drop in exports; (2) production of excess tobacco; (3) increase in yields per acre; (4) the practice of placing a premium on excess production by granting an increase in allotments for farms where excess tobacco has been produced in previous years.

With the permission of this committee, I should like to discuss several of these factors separately and to make certain recommendations for your consideration which we believe will act to relieve, at least partly, the present acute situation.

First, we believe that every possible effort should be exerted by the appropriate agencies and departments of the Government to stimulate foreign trade and especially to promote increased exports of agricultural commodities. The Agricultural Trade Development and Assistance Act authorizing the sale of $700 million worth of agricultural commodities for soft currencies during the next 3 years is a step in the right direction. We believe, however, that this program should be greatly expanded and the authorization increased.

Farmers Union will support legislation to this end. We further recommend that this committee endeavor to secure passage of legislation which will earmark a definite portion of the funds authorized under this program for use in promoting increased exports of tobacco. We believe that action of this nature can very well be justified in view of the extent to which the economy of a substantial area of this country is dependent on the tobacco industry.

Mr. Chairman, the tobacco producers of this country are as nearly united in their support of the tobacco marketing quota-price support-inspection programs as any group of farmers have ever been on any matter. They recognized in this program the personification of our democratic system of government, applied to the problems of agricultural producers. This is evidenced by their overwhelming vote in favor of marketing quotas-usually around 90 to 95 percent in favoreverytime they have an opportunity to express themselves. They do not consider this program as one of governmental regimentation, but instead as one which enables them to adopt and practice the same sound business principle which has always been practiced by industry, and that is of keeping supply in line with realistic demand. When tobacco producers agree to accept quotas in exchange for the assurance that they will receive 90 percent of a fair price for their tobacco, they expect the program to be administered so as to be effective and so as to discourage the production of excess tobacco.

Gentlemen, the present effective rate of penalty on excess tobacco50 percent of the previous year's market average-is not accomplishing its intended objective. It is not discouraging the production of excess tobacco. The records will show that in 1954, 10,271 acres of excess burley tobacco was produced and 16,616 acres of excess flue-cured tobacco. Using burley tobacco as an example, the 10,271 acres of excess tobacco produced in 1954 probably yielded a production of nearly 20 million pounds. This tobacco has gone into the already inflated stocks, and when converted back in terms of acreage allotment for the 1955 year simply means that this acreage is being, or has been, trimmed off of all old tobacco farms. During the immediate preceding 5 years

40,439 acres of excess burley tobacco has been produced and marketed, probably resulting in an estimated production of 75 million pounds, which is now reflected in the 3.45 year supply on hand. This same situation is also applicable to the other kinds of quota tobacco as well as burley, but to a lesser degree. However, the effect on the cooperator's allotments is the same. To relieve this situation, we recommend and will support legislation to increase the penalty rate on excess tobacco to 75 percent of the previous year's market average, with such increased rate to be effective for the 1955 crop year.

There is another factor involved which relates to the same situation and which in our opinion is contributing as much to the production of excess tobacco as the present ineffective penalty rate. This is the practice being followed by the Department of placing a premium on the production of excess tobacco by granting increases in allotment based on overplanting. It works this way. The farm has an allotment of 3.0 acres. In 1954 6.0 acres were produced. The 1955 allotment for the farm is increased by 0.6 acre (one-fifth of the 1954 excess acreage) so that the 1955 preliminary allotment becomes 3.6 acres. There are a few gadgets involved in order to qualify for the increase, such as sufficient cropland and curing space, but usually the excess farm gets the increase. Let me point out that the 0.6-acre increase cited in this example will ultimately come off of the allotments for other farms. It is our opinion that it is not consistent to penalize a farmer for producing excess tobacco and then to award him with an increase in his allotment for doing so. It simply doesn't make sense.

We strongly urge and will support legislation to prohibit the granting of increases in allotments based on the production of excess tobacco. No credit whatever should be given in determining future National, State, or farm acreage allotments to the past production of excess tobacco.

On this problem of excess tobacco production, we further urge that compliance be rigidly enforced so as to discourage chiselers. After tobacco farmers accept quotas, the Government has a moral obligation to the vast majority of producers who cooperate and produce within their allotments to see that the program is properly enforced.

It is our understanding that consideration is being given, based on more recent figures, relating to the supply and demand situation to a further reduction in 1955 burley tobacco allotments. Mr. Chairman, in view of the present supply situation, we do not take the position that a further reduction is not justified, if we can consider only the mechanics of establishing allotments. But there are other elements to be considered. First, most farmers have already made plans to grow the acreage of tobacco in 1955 of which they have been notified by their county agricultural stabilization and conservation committees. They have seeded plant beds, and made trades with their tenants, and otherwise planned their operations.

It is almost the middle of March, gentlemen. A further reduction at this late date, it seems to me, would be, in effect, a breach of contract with the growers. In other words, when could the farmer ever be sure his allotment notice meant what it said? In view of these facts, we doubt the wisdom of a further reduction at this late date. However, we do not wish to make a definite recommendation in this regard until we have had time to consult with the growers and to analyze further the situation.

Mr. Chairman, if I might digress one moment, I want to mention a subject that is very close to the heart of the chairman of this subcommittee. There is one other matter I should like to discuss which is of vital concern to the producers of type 21 dark-fired tobacco. As you know, Maryland-type tobacco is not governed by quotas, whereas dark-fired tobacco is so governed. During this past year, 72.3 acres of Maryland-type tobacco was produced in Virginia and marketed on the dark-fired tobacco markets. In 1953, only 10.7 acres of Maryland tobacco were produced in Virginia. The people producing this tobacco are topping it low-at about 10 leaves-and are handling it so as to make it competitive with the legitimate type 21 tobacco. In other words, this tobacco which can be produced at will is being marketed on the dark-fired markets and is going into the dark-fired tobacco channels of trade and is being and has been included in the dark-fired stocks. Dark-fired tobacco allotments have been reduced by 10 percent for 1955. Unless action is taken immediately to prevent this practice, further reductions will be required in 1956; and, ultimately, the legitimate dark-fired type 21 grower will be put out of business.

We do not take the position that farmers should be prohibited from growing Maryland-type tobacco in Virginia, but instead that appropriate action should be taken to prevent this tobacco being so marketed as to compete in the channels of trade with dark-fired tobacco. This is a serious matter, and some 10,000 dark-fired growers in my State are gravely concerned. We respectfully urge that this committee give immediate consideration to this problem and that, if necessary, legislative action be taken to relieve this situation.

I should like to point out that the recommendations we have made have been thoroughly discussed with the leaders of all tobacco organizations in Virginia. A tobacco meeting, sponsored by the Virginia Farmers Union, was held last week at which time these matters were completely explored. This meeting was attended by representatives of all tobacco organizations in our State, including the president of the Virginia Dark-Fired Tobacco Growers Association, the president of the Virginia Burley Tobacco Growers Association, the manager of the Sun-Cured and Dark-Fired Tobacco Growers Association, the president of the Old Belt Flue-Cured Tobacco Warehouse Association, and others. Mr. Chairman, the recommendations presented to this committee will have the support of every tobacco organization in Virginia.

In closing my remarks, let me again express our most sincere appreciation for the privilege of appearing before this committee. The CHAIRMAN. Thank you very much, Mr. Vance.

Mr. COOLEY. Mr. Vance, I want to commend you on the splendid statement that you have presented to the committee this morning. I am sure you are aware of the fact that the tobacco growers of Virginia do not have either in Congress or out of Congress a greater champion than the chairman of this subcommittee, my distinguished colleague from Virginia, who represents so ably the farmers and other people of his district.

Mr. VANCE. We are very proud of him, Mr. Cooley.

Mr. COOLEY. It is because of his great interest in tobacco farmers that he was designated as the chairman of this subcommittee.

You have presented a problem here with regard to Maryland tobacco that had not occurred to me, and I was not aware of it. Have you discussed it with the tobacco people in the Department?

Mr. VANCE. Frankly we have not. The meeting that I referred to, Mr. Cooley, was held last week, and this problem was focused at that time, and the seriousness was called to our attention. This is the first opportunity we have had. I believe I discussed it with Congressman Abbitt yesterday.

Mr. COOLEY. I can appreciate the seriousness of the situation you mentioned, but I do not know just what can be done under the existing law. I doubt if the Department would be able to do anything. It may be that we will have to take some legislative action.

Mr. VANCE. That was the reason, sir, we thought it was necessary and proper that it be called to the attention of this committee. Mr. COOLEY. I hope that the people from the Department will consider it and see what can be done without having Congress do it.

On the other proposition, I can see what you have in mind. If the farmers voted on a referendum on the 0.7 reduction you feel it would be a breach of faith if you did it on this crop.

Mr. VANCE. I certainly do.

Mr. COOLEY. Suppose you submitted it in a referendum and the farmers voted for it, you would certainly go along with that.

Mr. VANCE. I have never been in the position of being afraid to submit any question whatever it might be to the decision of the farmers. I have found the majority usually make a sound decision. I certainly would have no objection.

Mr. COOLEY. I think that is what is being considered.

The CHAIRMAN. Yes. Let me say in fairness to all the witnesses today that that is more or less a new development as far as the grower representatives are concerned. Mr. Taylor presented it officially today for the first time. I am sure if the farmers knew the situation, they would approve it. It would be up to the farmers to determine how they want to go. I do want to thank you for bringing up that situation about the dark fired tobacco. I did not know anything about it until yesterday.

I see Mr. Miller is here, and I think maybe he has something on his mind. Would you like to say something at this time?

Mr. MILLER. Congressman Abbitt, in relation to the question of Maryland tobacco or for that matter any type of nonallotment tobacco being produced on a farm that has an allotment, this question was discussed with the Virginia committee on last Monday. We received their suggestions and studied the question in an all day session with them. Mr. Burnette of the Tobacco Division came back with the problem and discussed it with the Solicitor's Office. We feel on the advice of the Solicitor, we can handle the situation of commingling of nonallotment tobacco and allotment tobacco on any farm administratively rather than by legislation.

The CHAIRMAN. Can you take care of the situation after it gets to market and after it is bought by the buyers so that it cannot be commingled? We do not have the case of farmer X raising an acre of dark fired and an acre of Maryland and then commingling. The problem is the commingling after the sale by the producer, is it not? Mr. VANCE. Yes.

Mr. MILLER. It is my understanding that we cannot prevent the commingling in stock of those tobaccos after they have been sold. I am talking about marketing quota purposes only. That is about as far as I can speak. But there is a distinct possibility of that being commingled with stocks of allotted tobaccos and being considered as stocks in that tobacco at a later date.

Mr. VANCE. That is the problem.

The CHAIRMAN. I do not want to take any more of your time on that problem now, but I would appreciate it very much if I could get together with you next week and talk about that problem. Is there any other question by other members?

Senator CLEMENTS. Mr. Vance, I want to join with Congressman Cooley and Congressman Abbitt in expressing my appreciation for the fine statement you have made here this morning.

If I understand you, your group has taken no action on any of the recommendations that were made here this morning by Mr. Taylor, and that have been supported by other witnesses. You do not take the position against them. You wanted to study the matter and discuss it with your own group as to further cuts in acreage at this time?

Mr. VANCE. Senator Clements, I arrived a little bit late this morning, and Mr. Taylor had partially gone through his discussion when I got here, so I did not have an opportunity to hear exactly what his recommendations were. Our group have made specific recommendations and have taken a specific position in two of the points which I believe were brought out by the Department. One is on the increased penalty rate to 75 percent, and on eliminating the provision for granting increases for overplanting.

We have not taken a specific position with regard to the question of a further reduction in 1955 burley allotments nor have we taken an official position with respect to what should be done on this burley minimum proposition.

Senator CLEMENTS. That was my understanding from your statement. Those are the two points that his recommendations were based on this morning.

If his recommendations were put into effect there would be a referendum. I assume you through your group would join in taking all of the information that was available from the Department, including the seriousness of the burley situation down to the last grower in the Farmers Union group?

Mr. VANCE. We will lean over backward to do it, Senator.

Senator CLEMENTS. If you deem that it is essential for the saving of the tobacco program, you could go along with strong recommendations, even if they appear to be painful at the moment, if you were convinced it would save the program?

Mr. VANCE. Let me put it this way. We will certainly cooperate with the Department to the fullest extent in trying to get the latest information and statistics out to the farmers and the producers. From the standpoint of leaning a little too far this way in attempting to get them to take a further cut or further reduction in the seven-tenths minimum-in other words, what I am saying is that we would take strictly a neutral attitude, and would be governed by the wishes of the tobacco growers in our State after the facts are made clear to them.